International General Insurance(US:IGIC)2022-04-01 13:45Claims and Expenses - Gross claims and claim adjustment expenses decreased by 4.9% from $214.0 million in 2020 to $203.4 million in 2021, while net claims and claim adjustment expenses increased by 16.2% from $151.7 million in 2020 to $176.2 million in 2021[603]. - The net claims and claim adjustment expenses ratio improved to 51.0% for the year ended December 31, 2021, down from 53.5% in 2020, driven by favorable development on net loss reserves[603]. - Net claims and claim adjustment expenses decreased by 2.9% from $88.8 million in 2020 to $86.2 million in 2021, attributed to favorable development of loss reserves[659]. - The net claims and claims expense ratio for the casualty line improved from 66.2% in 2020 to 52.9% in 2021, reflecting better loss reserve management[661]. - The overall net claims and claims expense ratio increased by 1.2 percentage points to 47.2% for the year ended December 31, 2021[676]. - Net outstanding claims at the beginning of 2021 were $304.8 million, an increase from $236.8 million in 2020 and $196.8 million in 2019[776]. - The total net provision for claims and claims expenses for 2021 was $481.0 million, compared to $388.5 million in 2020 and $314.9 million in 2019, reflecting a year-over-year increase of 23.8%[776]. - Claims occurring during the current year amounted to $192.3 million in 2021, up from $157.8 million in 2020 and $124.4 million in 2019[776]. - The net payments for claims in 2021 totaled $87.3 million, slightly higher than $83.8 million in 2020 and $78.1 million in 2019[776]. - Gross case reserves, IBNR, and ULAE as of December 31, 2021, were $575.9 million, compared to $492.3 million in 2020 and $413.0 million in 2019[776]. - The net IBNR reserves and ULAE increased to $207.0 million in 2021 from $152.8 million in 2020, representing a growth of 35.4%[777]. - The net outstanding claims at the end of 2021 were $393.6 million, an increase of $88.8 million from $304.8 million in 2020[777]. - The total incurred claims increased by $66.7 million in 2021, indicating a trend of rising claims costs[780]. - Inflationary pressures may materially affect the company's consolidated results, particularly in the cost of settling claims[788]. Financial Performance - Net underwriting results increased by 36.7% from $77.4 million in 2020 to $105.8 million in 2021[608]. - Profit after tax for the year increased from $27.2 million in 2020 to $43.7 million in 2021, largely due to the increase in net underwriting results[620]. - General and administrative expenses increased by 25.6% from $46.9 million in 2020 to $58.9 million in 2021, attributed to new hires and technology investments[616]. - Share of loss from associates increased significantly from a loss of $1.5 million in 2020 to a loss of $7.3 million in 2021, primarily due to declines in fair value of investment properties[615]. - Total investment income, net increased by 22.6% from $11.5 million in 2020 to $14.1 million in 2021, primarily due to a rise in interest income[609]. - Other income (expenses) increased by 238.5% from $1.3 million in 2019 to $4.4 million in 2020, mainly due to an impairment loss on insurance receivables[645]. Premiums and Underwriting - Gross written premiums increased by 33.8% from $349.2 million in 2019 to $467.3 million in 2020, driven by growth across various segments[624]. - Net premiums earned increased by 31.6% from $215.5 million in 2019 to $283.5 million in 2020, primarily due to the rise in net written premiums[630]. - Gross written premiums in the specialty long-tail segment increased by 39.5% from $150.9 million in 2019 to $210.5 million in 2020, driven by positive rate movement in the casualty line of business[652]. - Gross written premiums in the specialty long-tail segment increased by 13.8% from $210.5 million in 2020 to $239.6 million in 2021, with casualty premiums rising from $157.5 million to $190.0 million[653]. - Gross written premiums in the specialty short-tail segment rose by 18.7% from $237.5 million in 2020 to $282.0 million in 2021, with significant growth in the construction and engineering line[668]. - The construction and engineering line of business saw a 73.7% increase in gross written premiums from $17.9 million in 2020 to $31.1 million in 2021[669]. - Gross written premiums in the reinsurance segment increased 24.4% from $19.3 million in 2020 to $24.0 million in 2021[687]. Investment Performance - Total investment income for the year ended December 31, 2021, was $14.1 million, compared to $11.5 million in 2020, reflecting an increase of approximately 22.6%[735]. - The average investment yield remained stable at 1.7% for both 2021 and 2020, while the investment yield based on average investments excluding cash slightly decreased from 2.2% in 2020 to 2.1% in 2021[735]. - The fair value of the company's total investments increased to $914.3 million as of December 31, 2021, up from $775.3 million in 2020, representing a growth of approximately 17.9%[734]. - Fixed income securities accounted for $420.9 million of the total investments, showing an increase from $393.6 million in 2020, which is a rise of about 6.7%[734]. - The company managed approximately $21.5 million of its investment portfolio through a third-party investment advisor, while the majority is managed in-house[733]. - The total investment income for 2021 included realized gains and losses, unrealized gains and losses, and expected credit losses, highlighting the complexity of the investment income structure[736]. - The company maintains certain minimum thresholds of cash and highly-rated fixed maturity securities to ensure liquidity in various scenarios, reflecting a conservative investment strategy[734]. Capital and Solvency - The company targets a solvency ratio of more than 120% of the group capital requirement to ensure capital strength[700]. - IGI Bermuda's statutory capital and surplus was $377.5 million in 2021, exceeding the Target Capital Level (TCL) of $280.8 million by $96.7 million[715]. - IGI UK's actual statutory capital surplus exceeded the PRA's requirements by 57.5% in 2021[722]. - IGI Europe’s actual statutory capital surplus exceeded the MFSA's requirements by 183% in 2021[727]. - The Enhanced Capital Requirement (ECR) for IGI Bermuda was $234.0 million in 2021, compared to $199.7 million in 2020 and $137.0 million in 2019[713]. Reserves and Actuarial Review - The independent actuarial reviews of reserves are conducted every six months, ensuring compliance with regulatory requirements[753]. - The reserving committee meets quarterly to review and recommend the quantum of claims reserves, incorporating inputs from various departments[752]. - The estimation of adequate reserves is particularly challenging for long-tail policies, which may not see claims paid until well after the policy term[758]. - As of December 31, 2021, IGI had $207.0 million of incurred but not reported (IBNR) loss reserves including ULAE, up from $152.8 million in 2020 and $107.3 million in 2019[785]. - The reserve strengthening for the year ended December 31, 2021, amounted to $16.1 million, compared to $6.1 million in 2020 and $6.3 million in 2019[786]. - The carrying balance of IBNR reserves at the end of 2021 was $207.0 million, which included a net charge to profit/loss of $54.2 million for the year[786]. - The company’s actuarial recommended reserve is intended to represent the mathematical expected value of the distribution of reasonably foreseeable outcomes of unpaid liabilities[781]. - Total carrying amount of insurance contract liabilities as of December 31, 2021, was $575.9 million, an increase from $492.3 million in 2020[802]. - Gross incurred but not reported claims (IBNR) as of December 31, 2021, amounted to $269.0 million, up from $179.9 million in 2020[802].